When Does an Estate Have to Pay the Deceased Person’s Debts?

A subject that often comes up in the probate of New York estates is the payment of debts. After all, your death does not automatically extinguish any creditor claims against you. Instead, your creditors may file a claim with the executor or administrator of your estate demanding payment.

But there are certain time limits applicable to such creditor claims. The Surrogate’s Court, which oversees probate estates in New York, typically sets a 7-month deadline to present a claim. This clock starts to run with the Surrogate’s Court appoints an executor or administrator for the estate. If the creditor waits until after the 7 months expires, the estate has no legal obligation to pay the claim.

Second Department: Son’s Estate Not Obligated to Pay Old Debts to Mother’s Estate

In addition to this 7-month probate deadline, the claim itself must not be barred under the statute of limitations applicable to the debt. Put another way, an executor is not obligated to pay a debt if the creditor could not have legally obtained a judgment against the debtor while they were still alive.

A recent decision from the Appellate Division, Second Department, Matter of Hollis, provides a helpful example. This case actually involved two estates, of a mother and son, respectively. The mother died in 2015. Under the terms of her will, any debts owed to her by her children would be deducted from their inheritance from her estate.

A few months later, in early 2016, one of the mother’s sons also passed away. Litigation followed between the administrator of the son’s estate (his widow) and the executor of the mother’s estate (another of her sons). Essentially, the mother’s estate claimed the son’s estate owed $147,265.35, which reflected money the mother loaned to the son between 2005 and 2008.

The son’s estate argued this loan debt was unenforceable. New York has a six-year statute of limitations on these types of debts, the son’s estate pointed out, and the mother’s estate did not present its creditor claim until 2016. This was well past the six-year deadline, as the most recent loan took place in 2008, eight years earlier.

Nevertheless, the Surrogate’s Court ruled against the son’s estate. It held that based on an email the son sent to his brothers in December 2015, just before his own death, he had made a “written acknowledgment of the debt,” which reset the statute of limitations.

Now, this is a real legal concept. Section 17-101 of the New York General Obligations Law does state that an “acknowledgment or promise contained in a writing signed by” a debtor can effectively restart the six-year clock for a creditor to take legal action. But as the Second Department explained, the son’s email here did not qualify as an “unqualified acknowledgment of the debt sufficient to reset the running of the statute of limitations.” Rather, the email said the son had been “informed” he owed money to his mother but that there were “mitigating circumstances that I would like to note sometime in the near future.” This was too vague to “renew” the statute of limitations, according to the appellate court.

Speak with a Putnam County Probate Attorney Today

If you have been named an executor or administrator for a loved one’s estate, collecting and paying valid debts is just one of many important tasks you will need to complete. An experienced Putnam County probate lawyer can provide you with invaluable advice and representation. Contact Meyer & Spencer, P.C., today to schedule a consultation with a member of our team.

Source:

scholar.google.com/scholar_case?case=6715441873395750508

https://www.meyer-spencer.com/probate-process-in-new-yorks-surrogate-courts/